Sowing of main crop progresses and prices improve
Planting is aligned with the previous season, although it’s below the historical average. Meanwhile, harvest prices improve as the US sees chances of bumper SB crop fall.
Planting, aligned with last season and below historical averages
With all eyes focused on the rains this weekend, SB and maize show a planting rate close to that of last season. However, it’s worth highlighting that both this and last year’s pace year were below the historical average for this time of the year.
SB dropped 4% from the last five-year average, showing about 23% of the area sown for this time of year. This week we could see sustained sowing progress, interrupted only by rainy days, which in turn contributed to the phenological development of the crops.
For its part, maize has lagged behind its historical average. Planting continues in the province of Buenos Aires, awaiting more rains, while in Cordoba province the early-planting has already ended. In Santa Fe, this week’s rains contributed to the growth of maize in the province, although soil moisture remains far from ideal.
Maize prices improve at harvest and producers take positions
Along with planting, good progress was also seen for the 2021/22 forward corn sales. To date, producers have already committed 9.7 Mil MT of new harvest maize, about 200 thousand tons ahead of last year. Good cereal prices and the intention of producers to close margins in advance stimulated /sales agreements during the week. Early-Corn traded around 197 USD/MT for March and May deliveries, while July corn reaching levels close to 178 USD/MT in the last week.
As for soybean, the picture is quite the opposite. So far, deferred sales are extremely discreet, despite good progress in the new campaign’s sowing process. In fact, in recent weeks, it was difficult to find offers for next campaign in Rosario. Currently, only 2.9 Mil MT of the 48.8 Mil MT that Argentina is expected to produce this season have been traded; 40% less than what had been traded at the same date in 2020/21. As for liquidity, the price of available soybean improved one week to the next, with values that reached 347 USD/MT by the end of the week.
US expectations of record SB crop decrease
The United States Department of Agriculture (USDA) caused surprise with its November WASDE report, lowering the SB production estimate for the 2021/22 season in the United States, shortly after the end of the harvest. A downward revision of yields in Indiana, Iowa, Ohio, and Kansas -four of the top six producing states in the northern country- caused the agency to cut its SB production forecast by 0.5 Mil MT to 120.4 Mil MT. Therefore, more likely than not, 2016/17 will continue to hold the record in production, with 120.5 Mil MT.
On a global scale, the USDA reduced its SB production estimate because of the lower production in the United States and in Argentina, whose estimate swung from 50 to 48.5 Mil MT due to a reduction in the estimated planted area. India partially compensates for this drop, with its bean production growing by 0.9 Mil MT. Exports suffer the same drops, as USDA cuts estimates by 1 Mil MT. The main export destination for this drop would be China.
Overall, for maize in the US, what stood out was an increase in the production estimated, which is consolidated as the second largest in history with 382.6 Mil MT. Regarding demand, industrial processing strongly affects the balance of corn in the US, considering that the last week of October was the second with the highest ethanol production in the history of the United States. In this context of greater demand for ethanol production, USDA also increased its estimate of domestic demand, which more than offset the increase in production, and resulted in an adjustment in stocks.
Source: https://bcr.com.ar/
Photo: REUTERS/Stringer
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